Supervisory colleges

College definition

Colleges are permanent, although flexible, coordination structures that bring together regulatory authorities involved in the supervision of a banking group. In practice, colleges are a mechanism for the exchange of information between home and host authorities, for the planning and performance of key supervisory tasks in a coordinated manner or jointly, including all aspects of ongoing supervision, and also for the preparation for and the handling of emergency situations. One of the fundamental tasks for supervisory authorities as members of colleges is reaching joint decisions on the risk-based capital adequacy of cross-border groups and their EEA subsidiaries.

Colleges as an effective tool for cross-border supervision

Enhanced cooperation between supervisory authorities both at EU and global level is key to strengthening the supervision of cross-border banking groups. Colleges of supervisors are the vehicles through which supervisory activities are coordinated. The EU law envisages the establishment of colleges of supervisors for EEA banks with subsidiaries or significant branches in other EEA countries. They may include supervisors in non-EEA countries, where relevant.

To assist in developing a consistent and effective college framework, the EBA's predecessor, CEBS, published guidelines (i) on the operational functioning of colleges (GL34) and (ii) on the joint assessment of the elements covered by the supervisory review and evaluation process and on joint decisions on the capital adequacy of cross-border banking groups within a college setting (GL39). With the implementation of the Capital Requirements Regulation (CRR) and the revised CRD, the guidelines will be replaced by the directly applicable technical standards covering (i) operational functioning of colleges, (iii) joint decision on institution-specific prudential requirements, (iii) passport notifications, as well as (iv) information exchange between home and host supervisors in relation to institutions operating through branches.

The structure of colleges reflects the activities of the supervised entity. Some of the smaller ones consist of two authorities only, whereas others comprise 20 or more authorities from all parts of the world. The frequency and intensity of college activities can also differ significantly depending on the size and complexity of the institutions.

With the creation of the Single Supervisory Mechanism (SSM), colleges of supervisors will continue to play an important role for banks with a presence in non-SSM countries and the EBA's role will be even more crucial there. If a bank operates only in SSM countries, it will be treated as "domestic" and will, therefore, fall under full responsibility of the SSM authorities.

Role of the EBA

The EBA promotes the efficient, effective and consistent functioning of colleges through its policy work, namely technical standards on the functioning of colleges, and their crucial tasks, including joint decisions on institution-specific prudential requirements, but also through its direct engagement and participation in colleges.

In 2013, EBA closely monitors the college activities most of the largest EEA banking groups. Through its participation in colleges, the EBA monitors and oversees the effective functioning of colleges and their compliance with both legal requirements and the action plan for colleges which EBA updates on a yearly basis. EBA staff provide regular feedback to the consolidating supervisors, encouraging them to share EBA staff observations and finding with all members of the college, while further guidance is provided through the EBA policy work that takes the form of draft technical standards, discussions papers and good practices papers.

Following the European Commission's proposal for an EU framework for bank recovery and resolution, the EBA issued a Recommendation seeking to ensure that the major EU cross-border banks develop group recovery plans by the end of 2013. These plans will be discussed within the colleges of supervisors.